New Report Raises Questions About How This Anti-Abortion Organization Collected Almost a Half a Million Dollars

Back in October, the state auditor of Pennsylvania, Eugene DePasguale, announced an audit of Real Alternatives, the anti-abortion nonprofit that runs the state's "abortion alternatives" program — the largest publicly funded crisis pregnancy center program in the country.

"I was surprised to hear the program existed," Mr. DePasquale told the Pittsburgh Post-Gazette. "To the best of my knowledge, none of my predecessors have looked at this."

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Real Alternatives has a five-year contract with Pennsylvania to receive and distribute $30 million in federal and state funds to support 29 nonprofit organizations that run 93 sites, which include maternity homes, adoption agencies, and pregnancy centers — nonprofit anti-abortion organizations that advertise "options counseling," pregnancy tests, and ultrasounds, and often try to dissuade women from having an abortion. As reported in Cosmopolitan last year, Real Alternatives's contract with the state cites debunked studies linking abortion to breast cancer and depression, and prohibits its affiliated nonprofits from promoting or dispensing contraception. The contract also encourages staff members to ask about women's spiritual lives and says its programming is intended to prevent women from "choosing abortion out of a sense of helplessness, hopelessness, or being completely alone." Under the banner of "Empowering Women for Life," Real Alternatives allots a maximum of just $24 worth of material assistance per pregnant woman.

Now the results of the audit are in, and while Pennsylvania's Bureau of Financial Operations found that Real Alternatives was "generally in compliance with the grant requirements," it also raises questions about how the contractor is using some of its funds.

Real Alternatives runs its program with a model similar to insurance companies: It reimburses nonprofits after they provide services. But the recent audit found that Real Alternatives has been retaining 3 percent of the money it has been telling the state it reimburses to service providers — a total of $497,368 from July 2012 to June 2015 — and recommended that the state determine if the fee is appropriate. When the state auditor asked Real Alternatives how it spends the money it collects from this fee, the organization said some of the money was spent on employee travel but did not allow auditors to analyze its expenses, claiming that the funds are now "corporate money," and therefore not subject to the audit.

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A Real Alternatives spokesperson told Cosmopolitan.com via email that since 1997, through private agreements, service providers voluntarily have given Real Alternatives a portion of the program's funds they receive after providing the services, and expanded on how they are used: "the funds are used to pay for things such as work outside the PA program; to establish a four month financial reserve for delays in the passage of PA budgets; to have cash reserves when DHS is late with payments; to have funds available for work on new follow-on contracts and proposals to DHS; as well as to have cash to cover staff presentations to other states inquiring about the PA Program." The spokesman also said, "They are simply not taxpayer funds."

The state disagrees. "They are absolutely dollars that we have provided to Real Alternatives, so they are taxpayer dollars," says Ted Dallas, secretary of the Department of Human Services, which oversees the program.

The audit report questions the 3 percent fee because, among other reasons, Real Alternatives is using funds entrusted to them for social programs to "fund expenses that are not permitted under the Grant Agreement, such as travel and other expenses to support advancement of the program in other states." In 2005, Real Alternatives helped set up Texas Pregnancy Care Network, a state-run contractor that also distributes public funds — $9.15 million this year— to private anti-abortion organizations. In 2013, Michigan hired Real Alternatives to run its new pregnancy center program, and in 2015, Indiana gave it a $3.5 million contract to oversee its growing pregnancy center program.

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For decades, it has been hard to regulate or litigate against pregnancy centers, Kelli Garcia, senior counsel at Women's National Law Center explains, because a majority of pregnancy centers are nonprofits that offer services without charging fees. As a result, courts have typically decided that those centers' practices don't fall under consumer protection laws. That means if a woman alleges that a pregnancy center's website and signage misled her into believing she was making an appointment at an abortion clinic, she would have a hard time successfully suing for false advertising. Likewise, a court might consider a volunteer providing misinformation a form of free speech or religious freedom, not medical malpractice. But that could change if pregnancy centers are engaging in commerce, according to Garcia. The Pennsylvania audit classifies women who visit pregnancy centers as "consumers." "If the pregnancy centers are taking fees for services, as the audit suggests they are," Garcia explains, "then it is harder for them to claim that the consumer protections laws don't apply to them."

"They can't have it both ways," Garcia says, adding that you'd have to have a really specific example to bring a legal challenge but that "there's a reasonable argument to be made that deceptive practices could fall under [consumer protections]."

In coming weeks, Pennsylvania's Department of Human Services will evaluate what to do next. "We will be asking Real Alternatives to make some changes as a result of the audit," Dallas says. "Exactly what we're going to ask them to do is not fully determined." This audit looked solely at financial agreements, but Dallas says the state's auditor general may decide to "take a more expansive look" at programming.

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